Breadtalk Group: External Environment and Issue Analysis

This report provides a comprehensive analysis of the Breadtalk group, examining its management practices, external environment, and strategic positioning within the Singapore economy. It begins with an introduction to the company, highlighting its business model, global presence, and product offerings. The report then delves into an external environmental analysis, evaluating opportunities, threats, and the impact of political, economic, social, technological, legal, and environmental factors (PESTLE analysis) on BreadTalk's performance. Furthermore, it applies Porter's Five Forces framework to assess the competitive dynamics within the bakery industry, including competitive rivalry, the threat of new entrants and substitutes, and the bargaining power of suppliers and customers. Based on these analyses, the report offers strategic recommendations, including cost leadership, differentiation, market focus, and innovation, to enhance BreadTalk's competitive advantage and navigate the challenges in the market. The report concludes by summarizing the key findings and emphasizing the importance of adapting to environmental changes and meeting customer demands through continuous innovation.

RUNNING HEAD: Introduction to management 0
Breadtalk
Introduction to management

Introduction to management 1
Introduction of company
In this report, BreadTalk group is taken to understand management. The external
environmental analysis and issue analysis are taken to analyse Singapore economy and
recommendations are also given on the economy of Singapore. The BreadTalk group is
investment holding company and was founded in 2000 and has 1000 outlets in 17 locals. The
company listed on the Singapore Exchange Limited in 2003 (Ying & Hongcui, 2015). The
group has bakery, restaurants and food atrium. The group has 850 bakeries and 26 restaurants
in Singapore and Thailand. The company offers fresh products and do not use preservatives.
The signature of BreadTalk is “Floss Bun”. The stores of group are located in the malls of
Singapore and the company is also expanded internationally. The group has 746 outlets and
more than 7000 employees in Singapore, Malaysia, Hong Kong, China and the Middle East.
The company also holds franchise for Din Tai Fung in Singapore. The signature dish of
franchise is soup dumplings “Xiao long bao”. The group also launches new range of products
every six months according to seasonal trends. The bakery contributes 52% of revenue, food
republic 29% and restaurants around 19%. The group offers franchising opportunities. The
outlet also sold rocket shaped products to celebrate China’s astronaut in space.
External environmental analysis
Environmental analysis identifies all the external forces which affect performance of
business. It evaluates macro environmental factors. It focuses on the factors which influences
profitability of bakery industries. The companies have to make changes in the organisation to
stay competitive in the environment (Combe, 2014).
Opportunities: Opportunities are the chances to grow. The business can make development
by using opportunities. The companies can expand it’s operations in other countries.
BreadTalk can also diversify into some retail brands such as clothing, footwear and
accessories. The companies can expand via acquisitions than setting up a new venture (Saari,
2017). BreadTalk has got success in expanding business this way. It is a better way of
expansion in the Singapore economy.
Threats: The company can avoid threats once it’s known to the facts which can be harmful. It
can be in the form of competition from strong players. The rules and regulations of the
economy are also threat as it constrains the activity of business. At the same time, entry of

Introduction to management 2
new companies has also created intense competition. The BreadTalk has competition from
small bakeries like Crystal jade and Koufu. The market and growth in Singapore economy
also become saturated due to it’s small size (Islam & Mamun, 2017).
Pestle analysis
The dimensions of external environmental are:
Political factors: The political environment in supportive in Singapore. It includes political
factors such as trade laws, taxation, legislation and training. A company can develop by using
these opportunities. There is less number of political riots and many trade laws to protect
companies. BreadTalk faced major benefits due to the stability of government. Trade
agreement of China and Singapore was also considered favourable for the company
(Anderson, et. al. 2015).
Economic factors: It includes gross domestic product, unemployment rates, Interest rate,
inflation and currency exchange rates. These factors are helpful in influencing the purchasing
power of consumers. Inflation also influences the bakery industry in economy by decreasing
buying power. The Singapore government has also invested in expanding the economy. So,
BreadTalk group got chance to diversify it’s business.
Social factors: The social factors have control on the sales of products. It includes taste,
belief, attitude, tradition, ethics, lifestyle and values. The population of Singapore is
increasing which results in increasing demand of products. The consumption rate has also
increased. The eating habits of people have also changed. Due to busy schedule of people, the
demand for bakery items has increased. It has given better opportunity to BreadTalk (Ross,
2016).
Technological factors: Technological advancement is the reason behind the change in
lifestyle of people. It includes innovation and communication technologies. It has significant
role in increasing production and decreasing cost of production. Advancement of technology
has important role in the development of Singapore economy. It has improved the method of
marketing. The BreadTalk has become successful in incorporating market campaign by the
use of technology.
Legal factors: These factors affect the business environment. The companies can legally enter
into other country’s economy and have to follow regulation of other countries. When a

Introduction to management 3
country makes regulation for industries, the companies will be bound to follow. It can be
regulations related to product, employment, patent, health and safety. The BreadTalk group
has opened franchise in China and follows regulations in that country.
Environmental factors: It includes climate changes and natural calamities. There is ministry
in the country which works on maintaining air quality and environmental issues. Singapore’s
business environment is relatively healthy (Lanzino & Brown Jr, 2014). There are sufficient
opportunities to expand existing business. The country has one of the fair judicial systems.
The organisations can easily get assistance of government. BreadTalk stopped selling soya
milk, as it was repackaged from Yeo’s packet drink. It was immoral, as it gave the impression
that drink was brewed in house.
Porter five forces
In the porter five force analysis five industry forces are taken to define the intensity of
competition. It determines the long run predictions of profitability in the bakery industry
(Levanti & Klein, 2016). The company can look beyond actions of competitors and can
evaluate factors that can affect business environment.
 Competitive rivalry within an industry: The industry is growing at fast rate in
Singapore. BreadTalk group have competitors from massive bakery franchises to
individual bakery outlets. These are Four Leaves, Kopitiam, Prima Deli Bakery,
Bengawan Solo and Food Junction. These bakeries make available similar products at
cheap prices. These food courts have large number of outlets and offers discount cards
to regular customers. The prices of massive bakery franchise are comparatively high
whereas the prices of individual bakeries are much lower (Albert & Beatty, 2014).
The group faces competition from the established companies and also the companies
which provides innovative products. The competition in the industry is penetrating
due to slow growth and exit barriers. The company is also facing competition due to
innovations and product variety of rivalries.
 Threat of new entrants: The new comers in bakery industry find it challenging to deal
with competitive market. It is easy to enter in market due to low barriers to entry. But
threat of new entrants is high. As the initial capital and the cost of equipment is low
and there is less requirement of research and development. The companies in
Singapore are adopting product differentiation strategy and effective distribution

Introduction to management 4
channel. Due to all these factors there is high level of competition which is threat for
new entrants. The bakery industry requires economies of scale. BreadTalk entered in
the bakery industry of Singapore in the year 2000. The company has been
continuously facing competition such as product differentiation and low cost from
other bakeries (Ralph & Gupta, 2015). The company is safe in the restaurant and food
atria business. As companies does not easily enter due to higher capital outlay and
experience is also required for running a restaurant.
 Threat of Substitute products or services: Substitutes are great threat in the bakery
industry of Singapore. As, the prices of substitutes can be relatively lower. As,
bakery items of competitor companies are at lower price of BreadTalk. Substitute
products can be diverse, out of which inferior products cannot satisfy needs of
consumers. Like Four Leaves bakery is threat for the BreadTalk because of the
similarity in products. The former one follows the strategy of providing quality goods
and services.
 Bargaining power of Suppliers: Suppliers have low bargaining power in the Singapore
bakery industry due to availability of large number of suppliers. The suppliers can
easily drive the price of products as customers purchase in bulk. The suppliers cannot
hike price of products as the customers are bakeries and restaurants (Christopher,
Laasch & Roberts, 2016). The ingredients also do not vary in quality and lowers
bargaining power. The group believes in effective relationship with suppliers because
of their intensive buying power. There is diverse distribution channel of products.
 Bargaining power of customers: Buyers enjoy huge bargaining power in the bakery
industry at Singapore as they have multiple choices. The competitors in the bakery
industry sell products at competitive prices. The demand for bakery items is highly
price elastic. The customers are sensitive to high prices. The taste and preference of
consumer changes as they have multiple choices and it also varies according to the
adjustments in prices. During inflation, the buyers shift to the affordable and cheap
alternatives.
 Evaluation of industry analysis: The buyers are having strong position in the market
along with strong threats from the substitute products, low entry barriers and rivalry
among competitors. The bakery industries in Singapore are viewed as attractive with
significant profit margins (Stewart, 2014).

Introduction to management 5
Recommendations
The organisation implements strategies such as Porter’s generics strategy to avoid problems,
gain competitive advantage and to acquire position in market. The strategy has certain aspects
such as:
 Low cost: The high cost is the problem faced by the organisation. The prices of
BreadTalk are more than the competitors. The company needs to produce products at
low cost while applying cost leadership in the organisation. To keep the cost low of
raw materials, the company considers purchasing over dairy and wheat farms. This
strategy can be achieved by lowering prices in the target market. There are three main
ways to implement strategy such as by achieving high asset utilisation, low operating
costs and control over value chain. This strategy is helpful in generating profit and the
consumers are getting benefit out of it (Wilkinson, Wood & Demirbag, 2014).
 Differentiation: Differentiation is unique characteristic of products. It helps to lead in
the market. Such products are valued by customers. It is used for the development of
products and offers distinctive attributes. BreadTalk needs to pay attention to the
contributing factors to deal bargaining power of customers in market. The factors
contributing in retail shops can be decoration, product packaging and attitude of staff.
The BreadTalk can display motif on outlets, the matching motif on the packaging
boxes of cakes and buns and conducting giveaway activity on weekends. Balloons
identical to motifs can also be given free to customers with kids. This strategy helps
company to charge premium price for products (Snyder, 2014).
 Focus on target market: It focuses on the particular part of the market. This strategy is
appropriate for BreadTalk as it avoids competition with big companies. The company
makes use of this strategy by focusing on the target market (Buono, 2015). It develops
specified products for the particular segment of society. These are developed
according to the need of customers. Such products help in building customer loyalty
and are less attractive to competitors.
 Innovations: The company focuses on innovations to increase market share.
BreadTalk produces products according to resource and capabilities of the firm. The
company innovates in differentiation. It helps in gaining competitive advantage and
customer loyalty. The company doing innovation offers products at high prices
because of no availability of substitute products (Wheelen & Hunger, 2017).
BreadTalk can strengthen itself and can ignore competition by making use of

Introduction to management 6
innovations. As less investment is sufficient, so the company can more produce such
products in order to avoid wastage.
Conclusion
From this report it can be concluded that BreadTalk held a competitive position in the market.
The external analysis of company has helped to gain a major position in the market due to
factors like opportunities, threats, legal, political, technological, economic and social. The
company is also facing economy slowdown due to competitive strategy of other companies.
BreadTalk has set itself as an established organisation today by using conventional business
techniques. The organisation pays attention to environmental changes by constantly
innovating and focusing market trends. It meets and satisfies the demand of customers by
making use of PESTLE analysis. The organisation makes use of porter analysis to remain
competitive in the market. On the other hand Four leave bakery is threat for the company.
The competitor company produces products at similar prices. The company also follows
porter generic strategies to avoid problems and acquire position in the market. The
organisation focuses on these aspects for the efficient operations. Core competency and
expertise in food of the BreadTalk ensures greater accomplishment. Now days the company
emphasizes on corporate level strategy to bring positive growth in revenue. The strategies
implemented in organisation ensure to bring more success.

Introduction to management 7
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